Silver, gold may surge next week as Middle East tension intensifies: Analysts

New Delhi, Mar 1 (PTI) Precious metal prices are likely to see a fiery start to the week when trading resumes on Monday, as investors would rush for safe-haven assets amid global uncertainties following the escalating the Middle East tension, analysts said.

President Donald Trump announced "major combat operations" in Iran after Israeli strikes on Tehran. Iranian state media confirmed the death of Supreme Leader Ayatollah Ali Khamenei on Sunday, triggering retaliations from Iran against US military installations and Israeli targets across the region.

Analysts said the extent of the impact on domestic silver and gold prices will depend on how long the conflict persists, as global investors recalibrate risk exposure amid fears of a prolonged instability in the Middle East.

Besides, they added that the geopolitical situation, macroeconomic data announcements (including manufacturing/services PMI from across regions), and US retail sales and non-farm payroll and employment data toward the end of the week will be factors.

"Gold and silver prices are set to remain highly volatile with gap-up on the opening session on Monday as the Middle East conflict involving renewed US and Israeli military action against Iran -- continues to dominate global risk sentiment," Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said.

He said escalating hostilities and diminishing hopes of a quick diplomatic resolution are driving investors toward traditional safe-haven assets like gold and silver, and widely expecting a gap-up opening for bullion markets.

"As global equities and risk assets come under pressure, capital tends to shift into precious metals, which act as a hedge against uncertainty," Trivedi added.

The domestic commodities market will remain closed on Tuesday due to Holi.

On the Multi Commodity Exchange, silver futures for the March contract surged Rs 22,054 or 8.72 per cent, while gold for April contract rose Rs 5,228, or 3.33 per cent, over the past week.

Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services, said silver and gold closed yet another week on a positive note, rising by 3.2 per cent and over 8 per cent, respectively.

"Bullion remains supported by a safe-haven bids, persistent buying from central banks and exchange-traded funds, amid rising geopolitical and economic uncertainty in the global markets," he said.

Mer added that the recent US Supreme court ruling against Trump's trade tariffs - terming most of them illegal - has added another layer to global uncertainty, with several companies filing refund lawsuits.

In the international market, Comex silver futures gained USD 10.34, or 12.55 per cent, and gold increased USD 167 or 3.3 per cent, during the past week.

Trivedi said energy markets are also responding to escalating conflict, with crude oil prices rising amid fears of supply disruption through the Strait of Hormuz, a key global shipping route, also supporting bullion interest.

"However, the impact may not be uniform -- if over the weekend there are diplomatic developments or indications of de-escalation, precious metals could see profit-taking after an initial spike of 3-6 per cent," he added.

According to brokerage firm Choice Broking, key global macroeconomic data, including Eurozone inflation, unemployment data, and European Central Bank meeting, will also guide global market sentiment. PTI HG HVA